Roche, the Swiss pharmaceutical company at the centre of the row over cancer drugs pricing, played a significant part in the genesis of the Cancer Drugs Fund, set up in 2010 to pay for drugs that were too expensive for NHS approval. Four years on the company has become the fund's largest beneficiary.

The existence of the fund leads to some confusing results. Kadcyla, the £90,000 advanced breast cancer drug, was rejected on Friday by Nice, the National Institute for Health and Care Excellence, on cost grounds for general NHS use. But Roche is already being reimbursed from the £600m fund.

A number of other Roche drugs have also been turned down by Nice because of their high cost. The drug that cancer doctors most frequently ask the fund to pay for is Roche's Avastin, rejected for both breast and bowel cancer, which accounts for a quarter of requests.

The fund was a politically expedient creation. It provided a way for any government to take the sting out of tabloid stories that cancer patients were being denied what are always described as "life-saving" drugs, although invariably they are not – at best they extend lives by usually a matter of months.

Key to its establishment was an inquiry, commissioned by the Labour government just before the 2010 election, into spending on drugs in the UK and other countries. Cancer tsar Sir Mike Richards jointly chaired the inquiry with John Melville, then head of Roche Products in the UK.

Their report found that UK spending on cancer drugs was lower than in comparable western countries. It was written by Mike Birtwistle, a lobbyist working for the consultancy MHP Health Mandate at the time, which numbered Roche among its clients.

Roche's spokesman said Melville had been invited to chair the inquiry into variations in drug use "in part due to our track record on using data to highlight variations in access to care". Editorial control firmly rested with the report's steering group and ultimately the Department of Health, it added.

Birtwistle said he was asked by Professor Richards to draft the report because of capacity constraints at the Department of Health. "This was supported by Roche as part of MHP's ongoing consultancy work for them and was part of John Melville's contribution to delivering the project," he said, adding that other organisations were also involved, including Nice.

Another client of MHP Health Mandate was the Rarer Cancers Foundation, a patient group that took the lead in campaigning and featured prominently in newspaper stories about cancer sufferers who were denied drugs. In 2008, the Foundation published a report on access to cancer drugs around the country, written by Birtwistle and his colleague Bill Morgan, who went on to become health secretary Andrew Lansley's special adviser after the election and then returned to lobbying work with Morgan when Lansley lost his job.

Its claims that cancer patients were being denied life-saving drugs were widely reported. This report was entirely funded by Roche – although later reports on the same theme were sponsored by multiple companies. Roche said, while it funded the Rarer Cancer Foundation's report, editorial control rested entirely with the charity.

But the fund today is increasingly recognised as a problem. It is over-spent and unsustainable and does not have the backing of the pharmaceutical industry as a whole, which now generally accepts the need for some price restraint and Nice's expert assessments. At a time when the NHS is under huge financial pressure, Roche is increasingly seen as out of step.

The Swiss pharma company is not a member of the Association of the British Pharmaceutical Industry (ABPI), the trade body. It was suspended from membership for six months in 2008 over a serious breach of the rules, involving supplying slimming clinics with its prescription-only drug Xenical. The company chose not to rejoin.

Asked why, it implies that cancer is a special case. "As one of the leading pharmaceutical developers of cancer medicines, our focus is on improving outcomes in cancer. This is not an area of focus for the ABPI, so this, along with our commercial reasons, is why we have chosen not to rejoin," said a spokesman. He said it continues to abide by the industry's code of practice.

The ABPI negotiates payments for medicines with the government and has recently agreed a deal that caps the NHS drugs bill at between £11bn and £12bn a year. The industry must reimburse the NHS if the bill rises higher. That means that the soaring cost of drugs paid for through the Cancer Drugs Fund may well end up with the rest of the industry having to foot the bill for Roche's high prices.

Stephen Whitehead, the ABPI's chief executive, said the body did not support the setting-up of the Cancer Drugs Fund. The member companies have embarked on a new, partnership approach to pricing, which needs "close collaboration with all interested groups including Nice, patient organisations, the NHS and the government", he said. For the first time, industry has "skin in the game" when it comes to the assessments of the value of new drugs, because they stand to lose if the ceiling on the drugs bill is breached.

"We have put in place partnership agreements with the NHS and Nice and it is absolutely in the interests of all the industry that we establish appropriate prices for medicines to ensure that there is a level playing field, otherwise you will have some parts of the industry underwriting other parts that are not undergoing effective value assessment," said Whitehead.

"The industry and the NHS needs effective and pro-innovative value assessment for new medicines. Partnership, not confrontation, is very clearly the way forward and this is recognised fully by the ABPI membership, given our shared interest in managing the medicines bill in the UK."